International Management 8th Edition by Fred Luthans,Jonathan Doh

Exercise 1

Objectives
• To introduce some of the complexities involved in doing business across international borders
• To examine what happens when countries seek to do business with one another without the benefit of a common language and customs
Background
Even with a common language, communication can break down, and interpretations of words and actions often can confound understanding and incur negative attributions of purpose.Add to this the differences of personal needs that exist from individual to individual, as well as national and cultural needs that exist from country to country.These limitless variables make cooperation across borders even more complex.
The Story
You are a delegation from a country that would like to enter into a large cooperative effort with a number of other countries for the production and distribution of a popular soft drink produced by the American company International Cola.In the past, countries in your region of the world have been resistant to allowing foreign soft drinks into their markets, despite consumer demands.However, recent thinking is that the advantages of allowing this competition outweigh the disadvantages.
International Cola has expressed an interest in setting up a bottling plant, a regional corporate headquarters, and four distribution depots.Their goal, of course, is to do this in the most economically efficient way possible to maximize profits.However, because the executives at International Cola believe this area to be a rich new market with outstanding potential and are therefore eager to get in, they have ceded to the demands of the various governments in the proposed alliance.These require International Cola to allow for local control of the facilities; to maintain only 49 percent interest in the facilities with local partners holding 51 percent ownership; and to allow the participating governments to work out among themselves the details of where the facilities will be located.
For the countries involved, having one or more of these facilities located within their borders will bring jobs, revenue, and a certain amount of prestige.(It is possible for a single country to have all six of the facilities: regional headquarters, bottling plant, distribution depots.)
Each of the countries involved shares at least two borders with the other countries.This has not always been the most peaceful area.Border skirmishes are frequent, most stemming from minor misunderstandings that became inflated by vast cultural and religious differences.
These distinct cultural differences between your country and your neighbors will likely become even more evident as you pursue the negotiation.It will be up to you to decide how to respond to them.While it is important for you to retain your own cultural integrity-for example, when you first meet a delegate from another country you will likely greet him or her in the cultural style of your country-you understand the importance of being sensitive to one another.If you understand, for example, that the cultural style of another country is to bow on meeting, whereas you shake hands, you may wish to bow instead.
Since you are negotiating the venture across borders, and each country has a different primary language, you have agreed to negotiate in English, but none of you are entirely fluent.Therefore, a few phrases will creep in from your own languages.
Wear your country's flag in a visible place at all times.
Instructions
Step 1 (30-40 minutes-may be done before class) Working in small groups (5-7), develop a profile of your country and its people based on profile sheets 1 and 2.
After you have completed profile sheets 1 and 2, briefly discuss them to be sure there is mutual understanding of what the group's behavior and negotiating stance are to be during the negotiation.
Step 2 (20 minutes-may be done before class) Based on the profile sheets, decide which International Cola facilities you believe you should have in your country and why you believe they should be in your country rather than one of the others that will be represented.For example, if you have a highly educated population, you may argue that you should be the home of the regional corporate headquarters; be aware, however, that another country might argue that you should not have bottling and distribution facilities because these do not require a highly educated or skilled labor force.
On the negotiation sheet, make a list of the facilities you believe your country should have and some notes as to what your arguments will be for having them.Also, make some notes on what you believe the other countries' counterarguments will be and how you expect to respond to them.
Step 3 (30-45 minutes-in class) Everyone in your group should pin a copy of your country's flag and motto on himself or herself in a visible place.One to three representatives from your group (delegation) should negotiate the arrangements for International Cola's facilities with the representatives from the other delegations.Be sure to use the cultural norms of your country during the negotiation, but do not tell the others what your social norms are.
Representatives should introduce themselves to one another on an individual basis.After personal introductions, representatives should form a circle in the center of the room with their delegations behind them, briefly describe their countries, state their positions, and begin negotiations.During negotiations, representatives should make an effort to use their new language at least three times.They should not use English for any of the six phrases listed.
Delegation representatives and the other members of their groups may communicate with one another at any point during the negotiation, but only in writing.Group members may also communicate among themselves, but only in writing during the negotiation.
Any group or representative may ask for a side meeting with one or more of the other groups during the negotiation.Side meetings may not last more than five minutes.
At any time in the negotiation, the delegation may change its representative.When such a change is made, the new representative and the other delegates must reintroduce themselves and greet one another.
Those members of each delegation who are not directly negotiating should be active observers.Use the observer sheet to record situations in which other groups insulted them, shamed them, or were otherwise offensive.
At the end of 45 minutes, the negotiation should be concluded whether or not an agreement has been reached.
What role did cultural differences play in the various phases of the negotiation process? Be careful not to overlook the introductory phase.Was the negotiation frustrating? Satisfying? Other? Why?